Hamilton Beach Brands Holding Co
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
HBB$32.16-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001709164-24-000021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001709164-24-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 36 previous paragraphs and 45 current paragraphs.
24 unchanged; 10 reworded; 5 added; 2 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Revenue - Revenue increased $19.1 million or 14.0% increase compared to the prior year due to increased unit volume and a more favorable product mix primarily driven by increased revenue in the US Consumer market. Additionally, sales increased in the Latin American and Mexican Consumer and Global Commercial markets, while sales decreased in the Canadian Consumer market.
Current report
First Six Months of 2024 Compared with First Six Months of 2023
Current report
Revenue - Revenue increased by $19.2 million compared to the prior year due to increased unit volume and a more favorable product mix primarily driven by increased revenue in the US Consumer market. Additionally, sales increased in the Latin American and Mexican Consumer and Global Commercial markets, while sales decreased in the Canadian Consumer market.
Current report
Income tax expense (benefit) -The effective tax rate was 37.2% compared to 23.7% in the prior year. The effective tax rate was higher for the six months ended June 30, 2024 due to a valuation allowance on foreign losses subject to a foreign statutory rate lower than the US tax rate.
Current report
Operating activities - Net cash provided by operating activities was $37.1 million compared to $57.3 million in the prior year. Net working capital provided cash of $38.8 million in 2024 compared to cash provided of $69.0 million in 2023. The 2024 and 2023 periods benefited from a continued focus on collections initiatives that led to improvements in days sales outstanding (DSO). The 2023 period benefited from significant excess inventory reduction activities.
Removed paragraphs (2)
Previous report
Revenue - Revenue was flat compared to the prior year. Revenue overall benefited from an 8% increase in unit volume and a more favorable product mix. Those benefits were offset by a lower average selling prices compared to the first quarter of 2023. Additionally, sales increased in the Latin American and Mexican Consumer markets, while sales decreased in the U.S. and Canadian Consumer markets. The Global Commercial market had a slight increase compared to the prior year. Our acquisition of HealthBeacon during the quarter created a new source of revenue in the Health market that was not material.
Previous report
Operating activities - Net cash provided by operating activities was $19.7 million compared to $34.9 million in the prior year. The decrease was primarily due to the payment of incentive compensation during the first quarter of 2024 which was paid out during the second quarter of 2023. Net working capital provided cash of $33.5 million in 2024 compared to cash provided of $39.9 million in 2023. The company significantly reduced excess inventory during the first quarter of 2023.
Reworded paragraphs (10)
Previous wording
First Quarter of 2024 Compared with First Quarter of 2023
Current wording
Second Quarter of 2024 Compared with Second Quarter of 2023
Previous wording
Gross profit - As a percentage of revenue, gross profit margin increased to 23.4% compared to 16.3% in the prior year primarily due to lower product costs and a favorable product mix partially offset by the impact of a $0.7 million non-cash lease impairment related to the consolidation of warehouses.
Current wording
Gross profit - As a percentage of revenue, gross profit margin increased to 25.9% compared to 20.0% in the prior year primarily due to lower product costs and a favorable product mix.
Previous wording
Interest expense- Interest expense, net decreased $1.1 million due to decreased average borrowings outstanding under the HBB Facility and lower interest rates compared to the first quarter of 2023.
Current wording
Interest expense, net- Interest expense, net decreased $0.7 million due to decreased average borrowings outstanding under the HBB Facility and lower interest rates compared to the second quarter of 2023.
Previous wording
Other expense (income), net- Other expense (income) includes currency losses of $0.1 million in the current year compared to currency gains of $0.1 million in the prior year.
Current wording
Other expense (income), net- Other expense (income), net includes currency losses of $0.6 million in the current year compared to currency gains of $0.4 million in the prior year.
Previous wording
Income tax expense (benefit) - The effective tax rate on loss was 8.6% and 24.7% for three months ended March 31, 2024 and 2023, respectively. The effective tax rate for the three months ended March 31, 2024 was impacted by the exclusion of the foreign losses of HealthBeacon requiring a full valuation allowance for which no benefit can be recognized.
Current wording
Income tax expense (benefit) - The effective tax rate on income was 33.2% and 50.9% for three months ended June 30, 2024 and 2023, respectively. The effective tax rate was lower in the three months ended June 30, 2024 due to a decrease in unfavorable discrete items, partially offset by a valuation allowance on foreign losses.
Previous wording
Selling, general and administrative expenses -Selling, general and administrative expenses increased by $5.0 million compared to the first quarter of 2023. Approximately one-half of this increase is related to the addition of HealthBeacon’s selling, general and administrative expenses along with $1.0 million of transaction costs that will not recur. The remaining half is related to an increase in employee-related costs including non-cash stock incentive compensation due to stock price appreciation.
Current wording
Selling, general and administrative expenses -Selling, general and administrative expenses increased $8.8 million compared to 2023. The increase was primarily due to the addition of HealthBeacon’s selling, general and administrative expenses along with $1.1 million of transaction costs, an increase in employee-related costs including non-cash stock incentive compensation due to stock price appreciation, and increased advertising expenses.
Previous wording
The HBB Facility expires on June 30, 2025. We believe funds available from cash on hand, the HBB Facility and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments arising during the next twelve months.
Current wording
The HBB Facility expires on June 30, 2025, within one year after the issuance of these financial statements. Given the market conditions including unfavorable pricing terms, we have not yet completed our refinancing of the HBB Facility and accordingly, all amounts outstanding have been classified as current liabilities. Based on the current status of the refinancing and our history of successfully refinancing our debt, we believe that it is probable that the HBB Facility will be refinanced before its maturity. We believe funds available from cash on hand, the HBB Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months.
Previous wording
Financing activities - Net cash used for financing activities was $2.1 million in 2024 compared to net cash used for financing activities of $33.0 million in 2023. The change is due to a decrease in HBB’s net borrowing activity on the HBB Facility.
Current wording
Financing activities - Net cash used for financing activities was $7.7 million in 2024 compared to net cash used for financing activities of $54.6 million in 2023. The change is due to a decrease in HBB’s net borrowing activity on the HBB Facility.
Previous wording
The Company does not expect to make voluntary repayments under the HBB Facility within the next twelve months as the rate of return to invest excess cash exceeds the average interest rate of the HBB Facility. A material decrease in interest rates could cause us to re-evaluate. The obligations under the HBB Facility are secured by substantially all of HBB’s assets. As of March 31, 2024, the borrowing base under the HBB Facility was $120.5 million and borrowings outstanding were $50.0 million. As of March 31, 2024, the excess availability under the HBB Facility was $70.5 million.
Current wording
The HBB Facility expires on June 30, 2025. The entire outstanding balance has been classified as a current liability due to the fact the facility expires within one year and has not yet been refinanced. The Company does not expect to make voluntary repayments under the HBB Facility within the next twelve months as the rate of return to invest excess cash exceeds the average interest rate of the HBB Facility. A material decrease in interest rates could cause us to re-evaluate.
Previous wording
The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility. Borrowings bear interest at a floating rate, which can be a base rate, SOFR or bankers’ acceptance rate, as defined in the HBB Facility, plus an applicable margin. The applicable margins, effective March 31, 2024, for base rate loans and SOFR loans denominated in U.S. dollars were 0.0% and 1.55%, respectively. The applicable margins, effective March 31, 2024, for base rate loans and bankers’ acceptance loans denominated in Canadian dollars were 0.0% and 1.55%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused commitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability. The weighted average interest rate applicable to the HBB Facility for the three months ended March 31, 2024 was 3.17% including the floating rate margin and the effect of the interest rate swap agreements described below.
Current wording
The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility. Borrowings bear interest at a floating rate, which can be a base rate, SOFR or bankers’ acceptance rate, as defined in the HBB Facility, plus an applicable margin. The applicable margins, effective June 30, 2024, for base rate loans and SOFR loans denominated in U.S. dollars were 0.0% and 1.55%, respectively. The applicable margins, effective June 30, 2024, for base rate loans and bankers’ acceptance loans denominated in Canadian dollars were 0.0% and 1.55%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused commitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability. The weighted average interest rate applicable to the HBB Facility for the six months ended June 30, 2024 was 3.17% including the floating rate margin and the effect of the interest rate swap agreements described below.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Selling, general and administrative expenses -Selling, general and administrative expenses increased by $3.8 million compared to the second quarter of 2023. The increase was primarily due to the addition of HealthBeacon’s selling, general and administrative expenses as well as overall increases in employee-related costs and advertising expenses.
Current report — wording carried from elsewhere
The following table identifies the components of the change in revenue:
Current report — wording carried from elsewhere
Gross profit -Gross profit margin increased to 24.8% from 18.2% primarily due to lower product costs and a favorable product mix.
Current report — wording carried from elsewhere
Interest expense, net- Interest expense, net decreased $1.8 million due to decreased average borrowings outstanding under the HBB Facility, and lower interest rates compared to 2023.
Current report — wording carried from elsewhere
Other expense (income), net- Other expense (income), net includes currency losses of $0.7 million in the current year compared to currency gains of $0.5 million in the prior year.
Current report — wording carried from elsewhere
The obligations under the HBB Facility are secured by substantially all of HBB’s assets. As of June 30, 2024, the borrowing base under the HBB Facility was $124.2 million and borrowings outstanding were $50.0 million. As of June 30, 2024, the excess availability under the HBB Facility was $74.2 million.